Manuel Noriega
Manuel Noriega; drawing by David Levine

For three short hours last February Panamanians celebrated in the streets. I drove through Panama City with a man who had been beaten and imprisoned under the current regime, and had been exiled for ten years in the Seventies by the government of General Torrijos. He was now flying the white flag of Panamanian democracy and honking his horn. Throughout the city people were sounding their horns in the streets, or standing waving white handkerchiefs; white flags were displayed from balconies and buses. It was six PM, February 25, 1988. An hour earlier, President Eric Arturo Delvalle had announced over national television that he had fired the military strong man General Manuel Antonio Noriega. With General Noriega apparently gone, Panamanians’ prayers for democracy seemed about to be answered.

We turned into Fiftieth Street, the traditional gathering place of the Civic Crusade for democracy, the street where the riots designed to oust Noriega had begun last summer. Then we heard shots. There was a smell of tear gas in the evening air. The white flags were hastily pulled in. We drove in silence between the lines of riot police—the self-styled Dobermans—and knew that something had gone wrong. In another hour we learned over foreign television that President Delvalle had failed. The army had rallied to Noriega. Delvalle was soon to go into hiding. The sole opposition newspaper was being occupied by troops. Twenty years of military dictatorship were not about to end. In Panama City that night, the streets were silent and deserted.

Delvalle’s attempt to rid Panama of Noriega was supported, though probably not initiated, by US policy makers. If so, this indicated a shift in US policy. For almost twenty years the United States supported the buildup of the Panamanian Defense Forces to keep Panama under control and to train the local armed forces that are to guard the Panama Canal when it is finally turned over to the Panamanians in the year 2000. In addition, the Reagan administration also used General Noriega to obtain information on Cuban activities in the region and help supply US aid to the Nicaraguan rebels in their war against the Sandinistas. Revelations by Noriega’s close associates to a Miami grand jury and in Senate hearings that Noriega was a major drug trafficker and had been supplying arms and information to both sides in the Nicaraguan conflict as well as in the protracted war in El Salvador seem to have forced the administration to revise its policy. No longer could the Pentagon and the CIA look upon Noriega as a “strategic asset.”

But even if Noriega is finally forced out through US pressure and Panamanian protests, will the armed forces rid themselves of corruption? Will the United States still honor the 1977 canal treaty, and hand over an important international waterway to a country that has become a haven for drug dealing and money laundering? And what is to become of the ten thousand US troops of the Southern Command and their thirty thousand dependents if Panama becomes in effect a hostile power?

To try to answer these questions I went to Panama in February and spoke with, among many others, leaders of the opposition, including Ricardo Arias Calderón, the head of the Christian Democrats, Aurelio Barría and Eduardo Vallarino, leaders of the Civic Crusade, the middle-class group that has mounted protests against Noriega, and Nicolás Ardito Barletta, the former president of Panama, as well as the US chief administrator of the Panama Canal Commission and his Panamanian deputy, and the commander in chief of the US Southern Command.


From its earliest history Panama has been a place of transit. The isthmus may have been part of Colombia in the nineteenth century, but it was connected geopolitically to the United States soon after gold was discovered in California in 1848. To make it easier to travel to the gold fields, New York bankers and merchants built a railroad across the isthmus by 1853; it proved a great financial success until 1869, when the first US transcontinental railroad sharply reduced its traffic. It was not until 1882 that Ferdinand de Lesseps, the French entrepreneur and builder of the Suez Canal, formed a company and began work on a canal. Defeated by disease and mismanagement, de Lesseps abandoned work on the waterway in 1893.

The US undertaking to build a canal was made possible only when Colombia authorized the French Compagnie Nouvelle to sell its rights and properties to the United States in 1903 and granted the United States control of a canal zone from the Atlantic port of Colón to Panama City on the Pacific coast. The treaty signed between the United States and Colombia was, nonetheless, turned down by the Colombian senate. President Theodore Roosevelt, however, was determined to have a canal. Encouraged by a French engineer, Philippe Bunau-Varilla, the inhabitants of Panama declared their independence from Colombia in 1903. It was a virtually bloodless revolution, a kind of opera buffa that included sending the commanders of the Colombian military detachment on a train trip from the Atlantic to the Pacific while they left behind the troops they commanded. It also included the appearance of a US gunship.


Washington immediately recognized the new republic in November 1903, and the following January Roosevelt told Congress that the United States, in the words of David McCullough, “had a mandate from civilization to build the canal.” The people of Panama, TR later said, “rose literally as one man.” (“Yes, and the one man was Roosevelt,” remarked Senator Edward Carmack of Tennessee.) The first canal treaty was signed between Secretary of State John Hay and Bunau-Varilla: no Panamanian signature was deemed necessary. The canal itself was begun soon after and completed on August 15, 1914, and under the terms of the 1903 treaty the United States was granted “in perpetuity” control of the ten-mile-wide Canal Zone. Panama was established as a protectorate of the United States. In return, Panama was to receive an annual annuity.1

From the outset, then, Panama was an anomaly. It was invented because of its geographical position, and the mainstays of its economy have been the employees who built and later maintained the canal and the US military presence there. Today agriculture and industry together contribute at best about 30 percent of the gross domestic product. Until recently, Panama was one of the richest countries in Latin America, with a per capita gross domestic product of $2200 (as of 1985). The distribution of wealth, however, was highly unequal, with 2.1 percent of the national income going to the bottom 20 percent and 17.8 percent to the top 5 percent. Panama’s population is only slightly more than two million, many of whom live in the cities at each end of the canal—Colón on the Atlantic coast (about 60,000) and Panama City on the Pacific (about 400,000). Roughly 70 percent of the population is of mixed Spanish and Indian blood—the so-called mestizos—with the remaining population made up of black, white, Indian, and Asian minorities. As in many other Latin American countries, the business elite is mainly white, while the poorest people tend to be blacks and Indians.

The canal itself not only bound the United States and Panama together but divided the country in two by a zone over which Panama has never had control. The only legal currency is US dollars, known as balboas. Panama can therefore pay neither its public employees nor its debts by printing money. Between 1903 and 1968 Panama had a constitutional system of government, dominated by a commercial oligarchy. During this period, the armed forces were little more than a militarized police force, though they periodically intervened to back presidents who would not challenge their prerogatives. All this changed in 1968 when the charismatic populist leader Colonel Omar Torrijos Herrera and the National Guard overthrew the legally elected president, Arnulfo Arias Madrid.

Arnulfo Arias distrusted the military and seemed likely to curb the growth of military spending, and he was distrusted by the United States. He had been president during the early months of World War II, and, I was told, was seen by Washington at that time as sympathizing with Hitler’s regime, especially the order and discipline the Nazis demanded. Soon after he was elected, Arias insisted that the Caribbean blacks in Panama, who often held British as well as Panamanian passports, learn Spanish. He put pressure on local Chinese businessmen to sell out to native Panamanians as part of an effort to instill a nationalist spirit. He even wanted Panama to have the power to create its own money, an idea he now regrets. “I wanted to make a little Switzerland out of Panama,” he told a friend recently, “but no one told me there were no Swiss here.”

With the war in Europe threatening to spread to the Western hemisphere, the Roosevelt administration was angry at Arias’s refusal to grant US rights to new bases unless Washington paid a high fee for them. The oligarchy of businessmen and landowners was also upset that Arias’s populist policies had displaced them. In 1941, he was briefly overthrown by the military with the tacit encouragement of the United States. Forced out again by the military in 1951 when he started to move against them, he was deposed for the third time in 1968 by Torrijos, this time only ten days after taking office. At eighty-seven, Arnulfo Arias nonetheless remains the most commanding figure in Panamanian politics, and may well be indispensable in any transition to democracy.

Torrijos also portrayed himself as a Panamanian nationalist. The National Guard, which numbered about 6,000 troops when he took power, was made up mostly of blacks or of middle-class mestizos like Torrijos himself, who was the son of a rural schoolteacher. National Guard officers were enthusiastic about “Torrijismo“; they stressed programs to improve conditions in the rural regions and to promote the poorer—especially the black—classes to political power. During Torrijos’s thirteen years as president before he was killed in an air crash in 1981, the National Guard built schools and hospitals, repaired roads and bridges, and constructed low-cost housing for the campesinos who came to the cities; and in these activities the army had both moral and economic support from the United States.


This was the era of the Alliance for Progress, when Washington believed that the armed forces should be encouraged to work among the people, winning “hearts and minds,” in order to forestall Marxist uprisings. Because there was no military academy in Panama, many of the officer class of the military were being trained in the Peruvian military academy, where reform-minded military officers had taken power in the same year as Torrijos.

The economy of Panama was also transformed during the Torrijos years. By instituting strict secrecy laws Panama became an international banking center, and by 1984 134 international banks were domiciled in Panama. The Atlantic port of Colón became the second largest free-trade zone after Hong Kong. And the economy boomed. At the same time, Panama’s substantial borrowing from abroad was used to expand public services such as transport and hospitals as well as for rural development and for urban housing. Two years after Torrijos’s death, the foreign debt stood at $3.4 billion, or 78 percent of GDP, one of the highest per capita debt levels in the world. The high growth of almost 5 percent through 1982 fell off abruptly as the world economy went into a recession. Nonetheless, during the Torrijos years Panama turned into a major international financial center.

The most publicized event of the period was of course the signing of two treaties with the United States on September 7, 1977. The Panama Canal Treaty turns over control of the canal to the Panamanians on December 31, 1999. A second treaty guarantees the neutrality of the canal and permits the United States to act unilaterally to defend the canal in perpetuity. At the same time the United States retains the right to station forces and keep bases in Panama until the year 2000. The treaties give the United States no right to interfere in the internal affairs of Panama. While some Panamanians objected to the terms of the treaties at the time, the willingness of the United States to gradually turn over the Canal Zone to Panamanian sovereignty has generally defused the anti-Americanism that had erupted in riots in 1964 over the American presence there.

Torrijos promised to give up his military dictatorship and restore democracy to Panama. He told President Carter he was committed to that goal when the treaties were signed, and “he made similar commitments to the then Majority Leader Senator Robert Byrd and the then Minority Leader Senator Howard Baker.”2 And Torrijos seemed to be sincere. Laws restricting freedom of the press and of assembly were repealed; the right to trial in all criminal cases was permitted; political parties were allowed to organize and become active. In 1978, the newly elected National Assembly chose Arístides Royo, a technocrat who helped negotiate the Panama treaties, to serve as president for a six-year term, while Torrijos remained commander of the National Guard, still the real power in Panama.


When Torrijos died in July 1981, the country was thrown into political turmoil. The following year, President Royo was overthrown by the National Guard, and during the next two years the principal military leaders installed no fewer than three powerless presidents while plotting to share power among themselves. Colonel Rubén Darío Paredes took over as head of the National Guard. Next in command was Colonel Noriega, head of military intelligence. As the story was told to me, in 1982 a deal was struck between Paredes, Noriega, and Lieutenant Colonel Roberto Díaz Herrera, the third most powerful officer in the National Guard. Paredes was to step down as commander of the National Guard and run for president in May 1984. Noriega would take over the National Guard. Then, once Paredes finished his term, Noriega would resign and run for the presidency, leaving Díaz Herrera as commander of the Guard. Noriega betrayed this agreement, however, and in 1984 refused to support Paredes, who lost the election by a large margin. Later Noriega also betrayed Díaz Herrera, setting off the sequence of events that led to the present crisis.

Still, the 1984 elections did not go as Noriega planned. Arnulfo Arias won again; but the military leaders refused to let him take office and declared that Nicolás Ardito Barletta was president. At this point, Noriega seemed in full control. Nor were US officials concerned with Latin Americans unhappy that Arias had been deprived of his election triumph. Barletta seemed to them a capable technocrat who might successfully deal with the growing debt crisis. The Panama Defense Forces (PDF), as the National Guard was now named, was growing in strength. Under Law 20, passed in 1983, the PDF took over almost all aspects of Panamanian public life, including the immigration department, the civil aeronautics administration, the railroads, the traffic department, and even the passport bureau. Under Noriega’s command, the defense forces also received more than $32 million in US military aid, which made it possible for Noriega to expand and modernize the force from about ten thousand to more than sixteen thousand in just about four years.3

In September 1985, however, Hugo Spadafora, a fierce critic of Noriega, was brutally murdered. Spadafora was a doctor, a vice-minister of health under Torrijos, and a romantic revolutionary. He had worked on the side of the rebels fighting against the Portuguese in Guinea-Bissau in the 1970s. Later, he fought with the Sandinista guerrillas against the Somoza regime in Nicaragua, and then, disillusioned with the Sandinistas, joined the anti-Sandinista rebels, the contras. On September 13, 1985, Dr. Spadafora, who had been living in San José, Costa Rica, crossed the border into Panama in a taxi, then boarded a bus for the provincial capital of Chiriquí. According to his brother Winston, Dr. Spadafora had spoken with agents of the US Drug Enforcement Administration (DEA) and presented evidence that General Noriega was heavily involved in selling drugs, chiefly cocaine, and in transporting them to the US. I was told that he may even have had the evidence with him when he was taken off the bus. An agent of the PDF accompanied him. That evening, witnesses saw cars of the kind used in the PDF near Chiriquí. The next day, the decapitated corpse of Dr. Spadafora was found across the border in Costa Rica. According to the autopsy, he had been tortured and then beheaded.4

The violence of the murder shocked Panamanians, yet it might have had little effect if President Barletta had not decided to appoint an independent commission to investigate the murder. When news of this reached Noriega, he summoned Barletta, who had just returned from New York, where he was visiting the United Nations. Barletta told me that Noriega kept him in PDF headquarters for fourteen hours, insisting that if Barletta continued to demand an inquiry into Spadafora’s death, he must resign. Barletta finally gave in. The vice-president, Eric Arturo Delvalle, who was known mainly as one of Noriega’s men, took over.

The next threat to Noriega’s fortunes came on June 1, 1987, when Díaz Herrera, now deputy commander of the PDF, announced his retirement. Five days later, in interviews on the radio and in the press, he accused Noriega and other members of the armed forces of being responsible for stealing the 1984 election from Arnulfo Arias and for killing Hugo Spadafora. Díaz Herrera claimed that a spiritual conversion prompted him to denounce Noriega. More likely, Díaz Herrera was angry that Noriega had never lived up to the bargain he had struck to make him the head of the armed forces. And Noriega, I was told by a number of well-placed Panamanians, also reneged on his offer to appoint Díaz Herrera ambassador to Japan. In view of Japanese interest in Panama, this might have proved a lucrative post.

Although under questioning Díaz Herrera confirmed many of the stories circulating in Panama that Noriega was a major drug trafficker, he failed to bring into the open the central fact of the Noriega regime—that many of the higher ranks of the PDF forces were deeply involved with the Latin American drug cartel centered in Medellín, Colombia. Nor did he say what several reliable sources have stated—that at a meeting in Cuzco, Peru, in August 1985, members of the cartel first informed Noriega that Dr. Spadafora had hard evidence of Noriega’s drug trafficking and had to be dealt with. It was not until Noriega was indicted for racketeering by a Miami grand jury in February of this year that the full extent of Noriega’s involvement with the drug cartel was known.

The Medellín cartel emerged during the 1970s when a group based in Colombia’s second largest city came to dominate the cocaine trade. A fairly clear picture of its methods has emerged from testimony before a US Senate subcommittee and investigations by American reporters.5 Coca leaves are grown mostly in Bolivia and Peru and turned into a thick paste there. The paste is then sent to processing laboratories in Colombia, where it is converted into powder for users, and shipped by plane and boat, often through Panama. The profits to the cartel—up to $10 billion, according to some estimates—come mainly from the United States, where as much as 80 percent of the cocaine is consumed. Dollars earned in the United States are first stored in “safe houses” in New York, Chicago, San Francisco, Los Angeles, Dallas, Houston, and New Orleans; the money, packed in boxes, is then transported by air freight to Panama where it is put in armored trucks by members of the PDF and delivered to the National Bank of Panama, to be transferred into accounts with dummy corporations registered to do business in the United States. The dollars then can return to the United States—“laundered”—where they can be used to buy government securities, real estate, and other legitimate investments.

The Medellín cartel, which supplies about 80 percent of the world’s cocaine, is now run by five Colombians—Jorge Luis Ochoa Vásquez, his two brothers Juan David and Fabio, Pablo Escobar-Gaviria, and Gonzalo Rodriguez Gacho. So powerful is the cartel that during the previous administration of Colombia’s President Belisario Betancur, it offered to pay off Colombia’s $15 billion foreign debt in return for amnesty. Since 1984 it has been responsible for the assassinations of the Colombian justice minister, a publisher, politicians, some fifty judges, a score of journalists, and the heads of police antidrug units. Last year the Colombian Supreme Court, fearful of death threats, ruled that the extradition treaty that permits Colombian traffickers to be tried in US courts should be suspended.

By now the cartel has expanded its activities beyond refining and marketing cocaine; it now plants coca in commercial quantities at home so that Colombia can produce the world’s third largest crop. The cartel has been the main source of Noriega’s income and no doubt it will try to establish close links with his successors.

Even if he did not stress the drug connection, Díaz Herrera’s revelations of corruption in the armed forces and Noriega’s role in the Spadafora murder confirmed the worst suspicions of the Panamanians. In early June, a coalition of business, labor, and professional groups organized what became known as the National Civic Crusade for Justice and Democracy. Many thousands of Panamanians took part in marches and street demonstrations denouncing the corruption of Noriega’s regime and demanding that he resign. They were often dealt with brutally. In the words of the US Senate staff report on Panama of December 8, 1987,

Between June and September 1987, over 1500 persons were arrested and, according to credible reports, subjected to “cruel, inhuman and degrading treatment” while in jail; 500 suffered bullet and birdshot wounds, 60 with damage to the eyes; and three Panamanians were killed.

When the US Senate passed a resolution in June calling for a transition to genuine democracy in Panama, the government responded by organizing its own demonstration against the US Embassy. On July 1, 1987, the Reagan administration suspended all US military and economic assistance to Panama. In December, the United States suspended the 1988 sugar quota. On February 4, General Noriega, one of his top officers, and fourteen other people were indicted by a Miami grand jury. The twelve-count indictment for racketeering stated that Noriega had made more than $4.6 million by turning his country into a vast clearinghouse for drugs and for money that was tied to the Colombian cocaine trade.6


Suspicions that Noriega was involved in the drug trade went back as far as 1972, and by the late 1970s US officials had no doubt that he was responsible for helping to move large amounts of cocaine from Colombia to the US. In a report by the Senate Select Committee on Intelligence, released February 21, 1978, officials in the Bureau of Narcotics and Dangerous Drugs (the predecessor of the DEA) suggested assassinating Noriega, who was then chief of intelligence of the National Guard, because Noriega’s drug dealings were so extensive. The bureau’s director later told the New York Times reporter Seymour Hersh that he had personally turned down this “option.”7

In 1980, a US attorney in Miami informed a senior Justice Department official that US customs agents had “sufficient” evidence to indict Noriega for the illegal export of $2 million in arms. But the Carter administration did not want the case to go forward, especially at a time when Noriega had recently done the administration a favor by giving refuge to the deposed Shah of Iran.8

Recent testimony indicates that in 1979 Noriega made a deal to put his arrangements with the Colombian drug cartel on a regular basis. In testimony before a Senate subcommittee on February 11, 1988, Ramón Milian Rodriguez, a Cuban-born accountant who calls himself former chief financial manager for the drug cartel, now serving forty-three years in a US prison, described the deal he made with Noriega eleven years ago. The cartel wanted “complete security for the [drug] money from the point that it reached Panama,” “immediate credit for cash deposits,” and “access to Panamanian assets”—the use of “diplomatic passports, diplomatic pouches, and access to information.” In return, Noriega was to receive between I and 1.5 percent of all money delivered to Panama by the cartel.

By access to information, Milian Rodriguez meant: “We’re talking basically about the American agents abroad, we’re talking about the use of radio frequencies, Coast Guard schedules, [US] Navy schedules.” In 1982, for example, the Colombian cartel had the name of every American agent in Medellín, Colombia. At that time, Noriega was receiving about $10 million a month from the cartel. From 1979 to 1983, when he was arrested, Rodriguez said he paid the general—“we’re talking ballpark figures—between $320 and $350 million.”9 These estimates have not been confirmed; but that Milian Rodriguez testified openly before a Senate subcommittee may indicate that the cartel already considered Noriega expendable. The US officials I have talked to doubt that he would have talked had the cartel wanted him to keep quiet.

The close relationship between Noriega and US officials during this same period was described in detail by his former political adviser, José I. Blandón, until January 1988 Panama’s consul general in New York. Blandón’s charges that Noriega had cooperated closely with the National Security Agency, the Central Intelligence Agency, and the Drug Enforcement Administration (DEA) were confirmed to me by other US officials, notably Norman Bailey, a former staff member of the National Security Council under the Reagan administration. Moreover, articles published in The New York Times by Seymour Hersh in June 1986 cited statements by other US officials that supported Blandón’s testimony on the extent of Noriega’s connections with the drug cartel. Although Noriega was working for the CIA and giving information about lower-level drug dealers to the DEA, he was, as a high US official told me, a double agent several times over. He gave information and underground help to Fidel Castro. He supplied arms to the Marxist Salvadoran rebels and to the Salvadoran government, to the Sandinistas and to the contras. These dealings were further confirmed in testimony before a Senate subcommittee not only by Blandón, but also by Noriega’s pilot, Floyd Carlton, and by Leigh Ritch, a drug trafficker who worked with the Colombian cartel. At one point, as the former NSC official Norman Bailey told me, US officials found out he was monitoring US intelligence intercepts. He was told the United States would put out a contract for his life if he continued.

American intelligence officials saw Noriega’s close relations with Fidel Castro as useful. According to former members of the National Security Agency as reported in The New York Times, June 11, 1986, Noriega bought highly sensitive NSA documents from a US Army sergeant on duty in Panama in the mid-1970s and sent them to Cuba. But despite Noriega’s willingness to provide intelligence to the Cubans, the CIA thought of the general as an invaluable asset because of the information on Havana he provided the CIA. “The station chiefs loved him,” a former American ambassador recalled. “As far as they were concerned, the stuff that they were getting was more interesting than what the Cubans were getting from Noriega on us.”

Fidel Castro appears to have believed the opposite, and, as Blandón has testified, probably “feared that Noriega would be replaced in Panama.” In one instance, when the Colombian cartel became unhappy with Noriega’s performance, Castro may have saved Noriega’s life. According to Blandón, in 1984, after the PDF had raided a drug processing plant in Darién that had been set up by the drug cartel in southern Panama, Castro met with Noriega and Blandón in Havana. The raid, it seems, was a mistake, ordered while Noriega was out of the country. Castro told Noriega that the drug cartel wanted back the $5 million it had given to him and his associates as a bribe to allow the Darién plant to be used. He said Noriega had better return the $5 million, the machinery in the processing plant, the helicopters, and the planes that had been seized, and he urged that the twenty-three prisoners taken in the raid be returned to Colombia. Castro’s mediation was successful. Yet the raid was explained to the US Drug Enforcement Administration “as a case which showed General Noriega’s cooperation with the fight against drug trafficking.”10

Shortly after the Sandinista victory in 1979, according to Blandón, Noriega began to sell arms to the Salvadoran guerrillas who had built up a $100 million cash reserve with ransom money collected in kidnappings. Blandón claimed that he met at least fifteen times with Salvadoran guerrilla leaders between 1979 and 1983 to pass on their requests for weapons to Noriega. Finally, in 1987, Noriega concluded an agreement with the Soviet government to give landing rights to the Soviet airline Aeroflot and to create a company to provide dry docks for Soviet fishing boats in the Pacific and the Atlantic. So, in the words of Senator John Kerry, chairman of the Foreign Relations subcommittee conducting hearings on Panama, “while General Noriega is busy being a member of the CIA, working for them, working with the Sandinistas, working to supply the rebels in El Salvador, he is simultaneously drug trafficking and busy bringing in a new contract, which results in the KGB being active in Panama.”11

Although Panama had maintained close relations with the Sandinistas since the 1970s when General Torrijos gave moral and material support to the guerrillas, the testimony by Blandón and others before Senator Kerry’s subcommittee reveals that Noriega sold arms to the contras. Blandón also told stories of Lieutenant Colonel Oliver North’s attempting to persuade Noriega to help the contras when they met on a yacht in Panama Bay in June 1985. This meeting has not been confirmed but it is of interest that Panama received increased economic aid shortly after it allegedly took place. As Blandón recounts it, “North particularly requested training assistance [for the contras] in bases located in Panama—something which General Noriega said yes to.” The reason for the request was that US funds could not be used for training contras at US bases in Panama. According to Blandón, the Panamanian bases were used.

In October 1985, Blandón testified, he was present at a second meeting, at which “General Noriega proposed to Colonel North that he could help the war in Nicaragua by sending elite units from Panama—these are special expert units in counterterrorism—and that they could conduct terrorist sabotage acts in Nicaragua.” North, according to Blandón, said he would speak to his superiors about the proposition. When he testified before the congressional committee investigating the Iran–contra affair North said he received such an offer—he did not name Noriega—and that Admiral Poindexter approved a plan to accept it; the plan was never implemented because North was dismissed.12

This meeting took place after Barletta was removed from the presidency, at a time when Panama was having financial difficulties, and Noriega and Blandón told North they needed financial help. Poindexter met with Noriega in December 1985 and told him bluntly, according to Blandón, that he should send some of his more corrupt officers abroad and bring back Barletta as president to deal with the worsening economic situation. The following year, though, Barletta remained out of office and Panama received, with US backing, full support for a refinancing program from the international lending agencies.13

Noriega’s dealings with foreign intelligence agencies seem likely to have included Mossad, the Israeli intelligence organization, through his close connection with an Israeli arms dealer, Mike Harare. Harare is a former senior agent of Mossad. Using the code name of Mikki, Harare commanded one of the assassination teams ordered to find and kill Palestinian terrorists in Europe after the 1972 Munich Olympics massacre. After six members of Harare’s team were arrested by Norwegian police in 1973 for killing a Moroccan they had mistaken for a Palestinian leader, Harare was sent to the Mossad bureau in Mexico City, which also has responsibility for Central America. According to the Miami Herald, he resigned from Mossad in the late 1970s and moved to Panama, where he became close to Torrijos and later to Noriega. He is also Panama’s honorary consul in Tel Aviv, where his family lives.

I was told both by a former US official and by a former high government official in Panama that Israel provided the Noriega regime with a deposit of $20 million in the National Bank of Panama in 1986 when Panama was faced with interest payments due on loans at the same time as it had to meet a public payroll. This money was not given as a formal loan, but as cash available to be used if needed. José Blandón also testified that Harare arranged for Noriega’s personal bodyguards to be trained by Israelis and that Harare worked with Noriega in obtaining arms for other countries by having Panama issue end-user certificates. In Blandón’s words, “this means that when you buy weapons in a given country, you have to say what those weapons are going to be used for ultimately so that they will not be sent to a country which is an enemy of the country issuing weapons. The name of Panama is usually used.” When Harare was asked about reports that Israel used Panama as a cover to obtain restricted US technology, he told a reporter from the Miami Herald: “If Israel ever needed something, like something for Dimona [Israel’s experimental nuclear reactor], it could be done.”14

The Israeli interest in Panama apparently derived from Noriega’s willingness to provide information to Israel about the activities of the Palestine Liberation Organization in Central America. His intelligence services could trace money paid by Arab countries to the PLO and sent to Panama, a convenient transmission point for funds supporting terrorist acts against Israeli diplomats, businesses, and other interests. Last autumn there were reports in Jerusalem that the United States was putting pressure on Israel to have Harare get out of Panama.15


By the end of 1987 the Reagan administration seems finally to have decided that Noriega was expendable. From Senate and House committees’ testimony over the years, however, it is clear that the US has found it of overriding importance to use Panama, and Noriega in particular, for a variety of intelligence activities, notwithstanding his flagrant involvement in exporting cocaine to the US. Twice in the last four years the Reagan administration rejected recommendations from its embassy in Panama City to break with Noriega—first in 1984 when Noriega arranged to have Nicolás Ardito Barletta declared president in a fraudulent election, and again in 1985 when Barletta was ousted in favor of Delvalle.16 It was only after the riots in the summer of 1987 that the tide began to turn. By the end of the year even the Defense Department had come around to the State Department’s view that Noriega had to go.

In December, Richard Armitage, an assistant secretary of defense, headed a mission in Panama City to deliver this message, but apparently the language Armitage used was too soft. While he was in Panama Armitage showed some enthusiasm for a plan for a transition to democracy that had been drawn up in October by Blandón and members of the Panamanian exile community. According to this scheme, Noriega would retire in April with the group of Panamanian officers who were closest to him. The next highest officer would serve as head of the PDF until the elections scheduled for May 1989. Although Blandón claimed that the general was aware that he was drawing up the plan, Noriega denounced the scheme only in January and fired Blandón as consul general in New York.

Noriega disavowed the plan probably because other officers close to him had discovered what was going on and feared he would abandon them. Or Noriega himself may have feared that, like any Mafia chieftain out of power, he knew too much and would be assassinated by the Medellín drug cartel.

With the United States committed to removing Noriega, the general struck back by issuing orders to use more violence against the people demonstrating against him. In Washington, a shadow Panamanian government forced the administration finally to take action to try to bring about the general’s downfall.

After trying to fire Noriega in February and failing, President Delvalle, by the end of March, was still in hiding. Washington, however, refused to recognize his successor, Manuel Solís Palma, and put into effect an economic squeeze designed to bring Noriega down. Panama had already defaulted on all interest payments for the $1.5 billion it owes to international lending institutions (as part of its foreign debt of almost $5 billion). Noriega was about to suspend all interest payments to private banks in mid-March. Washington then froze all Panamanian assets in banks outside the country, withheld the $6.5 million the US pays each month for the use of the canal, and suspended trade preferences on $96 million of imports from Panama. Forbidden by law to create its own currency, Panama is wholly dependent on the dollars the US provides. By the middle of March, there were no dollars to pay many thousands of Panamanian employees, and no gasoline for ordinary citizens; people were being fed by churches and church organizations, and families were going hungry. To add to Noriega’s problems, the Civic Crusade called a general strike, which brought the economy to a virtual standstill for the rest of the month.

Delvalle was a most improbable hero. After Barletta was forced out for suggesting an investigation of Spadafora’s murderer, Delvalle had willingly assumed the post of president and was widely considered Noriega’s lackey. A rich sugar planter from Panama’s well-to-do Jewish community, Delvalle was a member of the traditional oligarchy known as rabi blancos (or rich behinds) who formed the backbone of the Civic Crusade, and had little in common with the members of the armed forces who were generally darkskinned and from the poorer classes. Delvalle was considered by his friends to have betrayed his class when he became president and was no longer welcome at the exclusive Union Club. Last fall he was also snubbed by members of his congregation when he attended synagogue for the high holidays. Delvalle, I was told, was under heavy pressure from his family and friends to get rid of the general; he was also losing revenues from his sugar plantation after the United States suspended the sugar quota.

In Washington I was told that each of the administration’s recent actions were taken at the behest of Delvalle in hiding. This seems hard to believe. What is clear is that Delvalle turned over considerable authority to act in his name to a former assistant secretary of state for inter-American affairs, William D. Rogers, now a Washington lawyer at the firm of Arnold and Porter. With Delvalle still recognized by the United States as the legitimate president, the government of Panama became, in effect, Rogers’s law office. Rogers, however, was not acting alone. His associates in Washington also included Juan Sosa, the Panamanian ambassador to Washington, Gabriel Lewis Galindo, the former Panamanian ambassador to the United States, who had also been raising money for the Civic Crusade’s efforts in Washington, and Joel McCleary, a political consultant with the New York–based Sawyer and Miller Group. The public relations firm became, with Rogers’s law firm, part of a quasi-government of Panama being run from the US with varying degrees of collaboration with the Reagan administration.

I learned that McCleary had met with Delvalle in Miami a day or so before the Panamanian president was to see Elliott Abrams, the assistant secretary of state for inter-American affairs, on February 17. McCleary told Delvalle that prominent Panamanian exiles, now including José Blandón as well as Gabriel Lewis, were behind him if he were to fire Noriega. The only question was how to do it. Should he make an announcement in Panama? At a meeting of the Organization of American States in Washington? Or should he resign peacefully and then call for Noriega’s removal?

Without giving McCleary a firm answer, Delvalle then met with Elliott Abrams to discuss whether or not the United States would drop the indictments against Noriega were the general and his close associates to go into exile. Though Abrams reportedly told Delvalle he had no power to offer such a deal, he also told Delvalle: “What is certain is that Noriega has to go.”17 Delvalle, I was told, was assured of US backing if he fired Noriega, but it was probably not clear to Delvalle exactly what the United States was prepared to do.

The opposition parties, especially the Christian Democrats led by Ricardo Arias Calderón and the Authentic Panamanian party of Arnulfo Arias (or Arnulfistas as they are known), joined with the coalition of business and labor groups that made up the Civic Crusade in support of Delvalle when he announced he was firing Noriega. Still, Delvalle did not gain significant popularity, and, I was told, he was widely regarded as the US candidate to head a government of transition. On the other hand, with Arnulfo Arias in exile, no single Panamanian has emerged as the leading opponent of the general. Although the followers of Noriega have accused members of the Civic Crusade of being solely from the upper classes, the Crusade’s support has grown over the last six months throughout the population. Church leaders, too, endorsed the movement to unseat Noriega. Until March, the Church had been reluctant to confront Noriega, because many priests do not hold Panamanian citizenship. It was hard to find any support for Noriega outside the military and officials of his own party.

In early March, after Delvalle had dismissed Noriega and was supported in this by US economic pressure, many Panamanians believed Noriega would soon step aside. Most of the politicians I spoke with expected a three-man junta to emerge, including even a member of the armed forces, that would prepare for national elections in May 1989. But Noriega showed surprising staying power. When he was faced with strikes and demonstrations called for by the Civic Crusade, and later by spontaneous protests by government employees, including teachers, hospital employees, and dockworkers, Noriega responded with violence: he ordered his troops to tear gas the teachers and to storm the largest hospital in Panama. At least twenty-three workers were wounded.

Later in the month, Noriega had the PDF occupy flour mills, confiscating flour that was being held to feed the poor by Caritas, the Roman Catholic relief organization. After the dockworkers went on strike, the armed forces reopened the Pacific port of Balboa, though the port workers refused to return to work unless they were paid. Noriega ordered Panamanian troops and paramilitary units to storm a luxury hotel and arrest and detain many opposition figures who had earlier organized yet another protest march, which had again been broken up by police firing tear gas, water cannon, and birdshot. Noriega insisted that the banks open early in April, to cash government-issued checks, and the banks reportedly agreed to do so. 18

As the general strike spread throughout the country in the third week of March, Noriega sought to surround himself with loyalists. He fired at least eighteen officers, most of whom were put under arrest for having participated in a failed coup to unseat him earlier that month, and promoted 104 officers. But this move, according to his former second in-command, Roberto Díaz Herrera, may help to bring about “Noriega’s institutional death”; he jumped his favorites over senior officers in line for promotion.19

Noriega tried virtually any tactic to obtain dollars. He sent a pilot to Cuba to pick up $50 million from Libya but found that the Libyans had refused to send the cash, and the pilot—who later defected to the United States—returned carrying only Cuban arms, which then were stored in depots throughout Panama.20 The Wall Street Journal reported that Noriega tried to have local banks deposit checks owed to the government in a New York account at Chase Manhattan; this move, too, was unsuccessful. Some government workers, I was told, were being paid in coin from the hotel casinos.

Two senior State Department officials even went to Panama in mid-March to try to arrange for Noriega’s exit. They offered political asylum in Spain, and promised that the US would not seek Noriega’s extradition or try to seize his financial assets outside Panama. In return Noriega had to promise to retire his closest accomplices and those officers with over twenty-five years of service. The talks broke down because Noriega insisted he be allowed to remain in Panama. Clearly the administration had badly underestimated Noriega’s ability and determination to stay in power. Elliott Abrams admitted that “our experience with Marcos and Duvalier had led us to believe [US economic pressure] would work.”21 Neither Marcos nor Duvalier, however, was a military dictator.

By the end of March, Noriega had obtained enough money to meet some of the government’s payrolls. The cash came mainly from taxes paid by US companies with branches in Panama and from the conversion of Panamanian assets of the Latin American Export Bank (BLADEX) to hard currency in Europe.22

Latin American and Spanish officials urged mediation rather than coercion. Meeting in Costa Rica in the last week of March, the Spanish prime minister Felipe González, the Costa Rican president Oscar Arias Sánchez, the former Venezuelan president Carlos Andrés Pérez, and the former Costa Rican president Daniel Oduber asked Panama’s archbishop Marcos Gregorio McGrath to mediate. After talking with both sides, McGrath agreed to go ahead.23

As American economic pressure failed to bring down Noriega, Latin American nations began to complain of coercion by the United States. At a meeting of the Latin American Economic System on March 29, twenty-two countries, as ideologically diverse as Cuba and Chile, urged the Reagan administration to lift economic sanctions. They also said they would consider a Panamanian request for economic aid.24 The President of Mexico also warned the United States not to interfere “in political matters that are the sole concern of the Panamanian people.”25

As the month of March drew to a close, Noriega had retreated into a bunkerlike mentality. “Virility is proven by remaining in power,” 26 the general said last fall. As his country fell in ruins around him, General Noriega seemed determined to show he believed what he said—even at the risk of US military intervention, which Panama’s ambassador to Washington, speaking in the name of Delvalle, was calling for.27

Even with Noriega gone, however, the problems of setting up a democracy in Panama are formidable. The most serious issue is reform of the immensely corrupt Panama Defense Forces. A high US official told me, “We don’t see any member of a reformist military.” Everyone I spoke with agreed that Noriega’s closest accomplices in the military, the so-called inner cupola, variously listed as between six and ten officers, would have to be fired if there is to be any serious change. I was also given the names of officers who are considered relatively “clean.” Colonel Eduardo Herrera Hassan, currently the Panamanian ambassador to Israel, is most often mentioned.

At best, the PDF may be rendered less corrupt. But over the years the armed forces and its individual officers have been reported to hold interests in about 60 percent of Panama’s commercial enterprises. Military officers collect their own taxes on merchandise in the Colón Free Zone, on savings and loan companies, and on profits from prison labor. “You can’t make a mafia into a professional army,” said one Panamanian dissident.28 There is no way to turn the PDF back into a police force. On this all the leading politicians agree. So do the US officials, both in Panama and Washington. “We have to play ball with the PDF,” a Pentagon official told me; but the problems of keeping corruption under control may well be insoluble. Nor can one expect the drug cartel to abandon its efforts to suborn the officer corps.

In a post-Noriega world, the international banking community might well give credits to a government committed to democratic reform and economic solvency. But it is far from clear how a democratic system can be organized. A question much talked about is how to make legitimate the annulled 1984 election of Arnulfo Arias as president. If this were done, and Arias headed a junta government of transition, he would probably not run for president in 1989. On the other hand, if he decided to run a fifth time, at the age of eighty-three, and won, the military would certainly be hostile to him. An election that would involve an alliance between the Christian Democrats and the Arnulfistas would probably also result in the defeat of the Democratic Revolutionary party (PRD) that General Torrijos founded and that has been a tool of the military since. The only hope for the PRD, I was told repeatedly by party members in local political offices, is reform—something that would happen only if the armed forces were shaken up after Noriega leaves.

The future of Panama necessarily involves the future of the US military presence there and the defense and administration of the Panama Canal. It would seem weak on the part of the US to move the Southern Command from Panama in the face of threats from the Panamanian military. But there is a good case for placing the military command in the United States later on. This is what the former head of Southcom, General Paul Gorman, urged when he testified before the Kerry committee. “I regard the presence of the headquarters there as dysfunctional,” he said.

It is the only headquarters of a US combat command, the gates of which are guarded by foreign troops, the water, sewage, electricity is under the control of a foreign power, and at the moment, I would have to say, probably a hostile power. Not a very useful kind of a posture to have a headquarters involved in a significant military undertaking. 29

Unless Panamanian armed forces are reformed, however, there would be little support in Washington for shifting the Southern Command elsewhere until the US is obliged to do so, according to the treaty, in the year 2000.

Should the military remain in tight control of Panama, violent attacks on the canal itself cannot be ruled out. I was told by a leading Panamanian critic of Noriega that sabotage of the canal was likely to be the next move were Noriega to stay in power. This would be done specifically to provoke US intervention so that a “less corrupt” PDF would take over.

The canal remains Panama’s most important asset. Even if it is too small for supertankers it is still a vital international waterway, with tolls and revenues (in 1987) reaching $330 million in the fiscal year ending September 1987. Panama itself received $80 million in fees. Although the canal itself has been run impartially and well under the direction of the US chief administrator, Dennis P. McAuliffe, and the deputy administrator, the Panamanian Fernando Manfredo, there have been attempts by the PDF to override the procedures guaranteeing that ships pass through the canal on a firstcome, first-serve basis. The New York Times reported in March that “Panamanian naval and other craft, including impounded vessels, have sometimes tried—but never with success—to push ahead of ships that had reserved places in line.” Other canal operations, including ports, marine bunkering facilities, a railroad, a bridge, and air traffic control, are already controlled by political appointees “who have failed to run the operations efficiently or in a nonpartisan way.”30

Beginning in 1990, the chief administrator must be a Panamanian, to be appointed by the winner of the 1989 presidential elections in Panama. Under US Public Law 96-70, however, the chief administrator, while nominated by the new Panamanian government, must be approved by the president of the United States “by and with the advice and consent of the Senate.”31 It is hard to imagine that any appointee of a Panamanian government dominated by a corrupt military would gain Senate approval. If so, this would put in question the Panama Canal Treaty itself.

There is already talk among prominent Panamanians of setting up an independent commission composed of canal users when the canal is finally turned over to Panama that would help to insulate the canal’s administration from political interference. By the end of the century, however, it may well be that neither Panama nor the United States will control the canal. The Japanese have offered financing—well over $400 million—to widen the fifty-one-mile-long waterway. If this happens, Japanese will surely join the Americans and Panamanians now sitting on the board.32

For two decades the United States has supported the creation of a Panamanian armed force in order to defend an indefensible canal. The professional army we trained turned into a hostile military in the pay of a foreign drug cartel. The Reagan administration used it to help in its war against the Sandinistas and to further its aims in EL Salvador. We are now left with an army that has been justly described as “the axle around which the wheel of corruption turns.”33 It is this army that now holds the key to democracy in Panama and America’s exit from the ongoing tragedy of the isthmus.

March 31, 1988

This Issue

April 28, 1988